Monterey Peninsula water district may look into own desal project

A day before key hearings begin on the latest Peninsula water supply proposal, the Monterey Peninsula Water Management District could look into backing its own desalination project.

On Monday, the water district board is set to consider spending up to $500,000 per year over two years to pursue a partnership with a developer on a desal plant in case California American Water's project is waylaid by litigation over water rights. That partnership could include teaming up with two existing desal proposals at Moss Landing or a new, as-yet-unidentified developer.

The board meets at 7 p.m. at district headquarters, 8 Harris Court, Building G, in Monterey.

District general manager Dave Stoldt said there has been talk among district officials and in the community for some time about taking the lead on what he termed a "safety net" proposal.

"It's getting time to put up or shut up," Stoldt said. "Let's see if there are other projects out there that can do the job if for whatever reason Cal Am's project is delayed. This is a promise to do due diligence to figure out which project or hybrid of projects could be potentially viable."

Monterey County Supervisor Dave Potter, who serves on the water district board but will miss Monday's meeting, said it makes sense to have a backup plan in case Cal Am's proposal "flounders" like it has in the past, leaving Peninsula customers in the lurch.

Cal Am has applied to the state Public Utilities Commission for the $400 million Monterey Peninsula Water Supply Project, which includes a desal plant north of Marina. The Peninsula is facing a state-ordered cutback in pumping from the Carmel River that would trim more than two-thirds of the area's usual water source by the end of 2016.

A district staff report suggests the disagreement over water rights between Cal Am and Salinas Valley farming interests is the main obstacle that has potential to delay or derail Cal Am's project.

Cal Am's plan calls for tapping the Salinas Valley groundwater basin to feed the proposed desal plant north of Marina. That has drawn heavy opposition from area farmers and could prompt a protracted water rights dispute, and possibly a lengthy, expensive adjudication of the water basin.

"Hence," the staff report read, "the risk of litigation over Salinas Valley groundwater rights is very high."

The staff report said even a proposal by Cal Am to attempt to tap only the shallow aquifer, which farmers have indicated they support, is not guaranteed to be successful. Construction of a test well designed to collect relevant data has already been delayed and could take longer to produce results than Cal Am expects.

It is unclear if a final PUC decision on the project, set for January 2014, could be issued without a resolution of the water rights issue, the report said. The report noted that it happened before with the failed regional desal project.

As a result, the staff report suggested it may be in "the Monterey Peninsula community's interest to develop a parallel process to advance or qualify an alternative project as a safety contingency."

Local water activist George Riley said the district appears poised to support a public option that he's convinced would end up being cheaper for ratepayers. Riley said public ownership proponents would be out in force at Monday's meeting to back the proposal.

Cal Am has filed a contingency plan with the PUC that includes alternative intake methods and sites, including a move to Moss Landing, but company officials insist the original proposal is still the best possible alternative.

Cal Am spokeswoman Catherine Bowie said company officials realize the district is following its charge to represent its constituents by exploring a range of options.

"We certainly understand the water management district has a responsibility to the public to continue to be involved and identify solutions," Bowie said. "But we believe our project is the least expensive and most reliable, and most capable of delivering water in a timely way."

According to the staff report, the district would issue a request for qualifications seeking potential desal project developers, including the backers of two Moss Landing proposals — the People's Project backed by Nader Agha and the city of Pacific Grove, and Deep Water Desal backed by a team led by Brent Constantz.

The district would pay for state and federal environmental review of a chosen project, using funds from a recently approved water supply charge. The district would serve as lead agency — alone or with another local entity — under the state's environmental quality act.

As part of the deal, the district would secure a one-year option to become the project owner, or negotiate with a third party for ownership, and enter a design and permitting phase upon certification of the environmental review.

While the staff report calls for the district to reserve an option to terminate the partnership if the PUC issues a permit to Cal Am for another project, Stoldt said the district could still pursue the alternative proposal if necessary. However, he said, at some point it wouldn't make sense to spend money on competing projects.

The report suggests engaging county representatives and mayors of the six Peninsula cities to discuss the merits of such a backup plan and seek their support.

Stoldt suggested there may be developments in the works, such as a third-party developer and a change in property ownership, that could shake things up at the Moss Landing site, but he declined to offer specifics.

The district would continue to support the PUC's review of the Cal Am project while conducting environmental review and permitting of an alternative plan, which would skip the PUC and proceed directly to the state Coastal Commission, according to the report.

The report also pointed out that a recent draft report by the Peninsula mayors' water authority consultant, SPI, had found the two Moss Landing proposals, which employ open ocean intake processes, would be comparable in water quality and lower in price than Cal Am's project.